In a move that has the industry buzzing (again!) about how we use data to build personalized ads, Google has announced that “once third-party cookies are phased out, we will not build alternate identifiers to track individuals as they browse across the web, nor will we use them in our products.” Essentially, Google will stop selling ads based on an individual user’s browsing habits across the web. Advertisers that rely on this data will need to find other means to target users.
It feels like a milestone moment. But what, exactly, does this announcement mean in an industry where we continue to see a shift in protecting user privacy while many marketers and regulators start to phase out other data collection processes? Let’s take a closer look.
Kiss third-party cookies goodbye
Last year, Google revealed plans to further protect user privacy on the web by making it easier for users to block or clear cookies used in third-party contexts. This new level of ad transparency will provide users with more visibility into the type of data that is being used, which will impact the way marketers can leverage data to personalize ads. We shared our thoughts on digital advertising in a cookie-less future at the time.
The use of third-party cookies has always been an integral tool for advertisers to deliver targeted, personalized ads. However, there have been growing concerns about privacy, with many users unaware of the data being collected on them while they browse online, which could range from email address harvesting to targeting you based on your political affiliation.
As a result, Google is moving further towards a privacy-first approach to preserve anonymity. They will now choose to “hide individuals within large crowds of people with common interests” through their privacy-preserving technologies such as the Federated Learning of Cohorts (FLoC). With FLoC, Google will group users into various audiences or cohorts based on similar browsing habits across the web, which effectively hides users “in the crowd” while using on-device processing to keep a user’s web history private. This would result in advertisers targeting ads to audiences and cohorts as opposed to an individual user, as shown in the below example:
Reference: Google FLoC White Paper
Despite their continued actions aimed at protecting user data, this only affects cross-site/cross-domain tracking and will not affect advertising on Google’s own properties and services. Why? Because third-party cookies are not required to track user behavior within a wholly owned entity such as Google, despite its many platforms (Search, YouTube, Gmail, etc.). As a result, advertisers will need to rethink their measurement solutions and be fluid with the changes in tracking data.
Personalized tracking in a cookie-less future
First-party data 🗂️
First-party data will continue to be the gold standard for targeting as third-party data becomes subject to tightened privacy and increased government scrutiny. First-party relationships will become vital and should be a top priority for all advertisers as there is minimal disruption to cookies in first-party contexts.
Now more than ever, advertisers need to be transparent in the type of data that is being collected. This will allow brands to build more robust relationships of trust and credibility between themselves and their audiences while giving users the control to share what they are comfortable with.
Relevance, not scale 🎯
There will be changes in the way marketers buy media by prioritizing relevancy over size. With more and more users opting out of sharing their data online, scaled media will become a challenge. But this is not a time to panic and scramble for ways to scale audiences through other forms of targeting. Instead, this is a time to focus on how you can still deliver a personalized experience to those who continue to share their data with you. This will fuel your marketing strategy and eventually dictate how you measure media.
Speaking of measurement, media will now need to be measured differently. Smaller audiences mean less data to report on, which means performance may look like it’s been negatively impacted. In reality, it’s a matter of not being able to measure data from those who opted out of sharing their information. This is where brands need to focus on marketing efficiency as opposed to only looking at media performance. For example, media leads may start to drop and cost per leads may start to rise as there is less data to collect from users. As a result, there may be discussions about shifting budget away from media. However, this is where data needs to be validated through other forms of measurement, such as internal sales/leads data.
At DAC, we continue to believe that transparency is always the best option. Although there is a shift in the way advertisers are now starting to analyze user behavior and their online browsing patterns (i.e. without the assistance of third-party cookies), companies that previously relied on this data will need to find other ways to target users and build a more meaningful measurement solution that marries privacy and personalization in a future centered around user protection and regulation. Fortunately, that just happens to be one of our specialties.